The gold course: the main risk is the fed rate hike
The price of gold by the end of summer konsolidiruyutsya. 28 Aug Troy ounce of the precious metal is trading at 1215,80. It is far from the August low at 1167,10, but still not enough to talk about reducing the risk of new sales. In the last week the precious metal has risen in price on 4%, there is potential for further growth.
The main risk for gold is a future rise in interest rates by the Federal reserve system of the United States. This factor supports the U.S. dollar and, accordingly, puts the gold in a weak position. At the moment the market estimates the probability of a rate hike at the meeting in September to 90% at the meeting in December is approximately 60%. If the fed has abandoned the idea of raising interest rates four times in 2018 and revised the figure three times, as previously thought, gold could go up faster.
Among the fundamental news is positive for the gold market, it is worth noting the growth of the Indian demand for the precious metal in April-July, jewelry industry increased purchases of the precious metal in 4 times. At the same time, we should admit that gold is now too little of the impact of fundamental indicators in the form of physical demand for metal production and reserves, and a lot of speculative aspects.
This means that the behavior of the U.S. dollar for the formation of gold prices at the moment remains the main. High volatility in the dollar, in turn, makes gold more movable asset than it was previously.
On 4-hour chart of gold we see the rising tendency development. To date, the market is close to the target upper resistance line projection of the channel.
As the main purpose of the growth can be considered a mark 1216,50. This level is providing the resistance up-trend could trigger a pullback to the support line – level 1200,00. Allowing further development of the uptrend with the completion of the local correction, the rebound from the support and breakout of the current resistance will open the way quotes in the following projection channel. The nearest significant target for growth can be a mark 1235,00.